Processors bracing for pain

Australia’s meat processing industry is bracing for further hardship as the impact of natural disasters continues to send shockwaves through the supply chain.

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Australia’s meat processing industry is bracing for further hardship as the impact of natural disasters continues to send shockwaves through the supply chain.

The devastating effects of drought across eastern Australia and floods in northern Queensland are being felt as the number of cattle available for slaughter falls.

Australian Meat Processor Corporation chief executive Peter Rizzo said reports suggested there would be a two per cent reduction in the national herd to between 26million and 27million cattle.

‘‘As a processing sector the impact is not felt initially, it’s obviously felt post-event when we don’t get the livestock or the progeny that comes from those animals we’ve now lost,’’ he told a Senate estimates hearing in Canberra on Thursday.

He said AMPC — the industry’s research and development body — was expecting the revenue from producers’ levies to be at its lowest level since 2012.

‘‘The big impact for us is when the drought breaks,’’ Mr Rizzo said.

Processing plants are expected to shut down and take 18 months to regenerate once the boom cycle replaces the bust.

‘‘There are the skeletons of old processing plants all over Australia that have lived and died on the vagaries of the supply metrics that we have,’’ Mr Rizzo said.

New figures have also laid bare the competitive challenges the meat industry faces through labour, energy and certification costs.

AMPC research released last week showed the average cost of processing to after animals are slaughtered is about $360 a head in Australia.

That’s higher than the $305 cost in New Zealand, $290 in the United States, $205 in Argentina and $172 in Brazil.

Labour makes up the majority of those figures, costing $210 in Australia, $164 in NZ, $129 in the US and less than $90 in the two South American nations.

Australia also led the way for energy costs which averaged $21 for every animal, with NZ and the US lower at $16 and $12 respectively.

Certification costs $7.30 per head of cattle, while in Brazil it is 50¢, $1.50 in the US and $2.20 in Argentina.

‘‘We just can’t ratchet these costs up and be competitive internationally,’’ Mr Rizzo said.